The World Bank New Delhi Office Phone: +911141479301/+911149247601 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Mailing Address: P.O. Box 416 iNTERNATIONAL DEVELOPMENT ASSOCIATION - 0 003 DOO MENTS : . February 27, 2015 Mr. I.Y.R. Krishna Rao Chief Secretary Government of Andhra Pradesh Secretariat Hyderabad 500 022 India Dear Mr. Rao: INDIA: Andhra Pradesh and Telangana Road Sector Project - Loan No.7792-IN (formerly known as Andhra Pradesh Road Sector Project) Amendment to Project Agreement and Supplemental Letter (Indicators) We refer to: (i) the loan agreement between the International Bank for Reconstruction and Development (the Bank) and India (the Borrower) dated January 22, 2010 (the Loan Agreement); (ii) the project agreement of the same date between the Bank and the State of Andhra Pradesh (Andhra Pradesh) (the AP-Project Agreement); and (iii) the supplemental letter of the same date regarding performance monitoring indicators agreed further to the AP Project Agreement. The Recipient has advised the Bank of the enactment of the Andhra Pradesh Reorganization Act, 2014 (6 of 2014), published in the Gazette of India dated March 1, 2014, creating the new State of Telangana (Telangana), formerly part of Andhra Pradesh. We also refer to the Borrower's letter dated December 16, 2014 and to the discussions among the Borrower, Andhra Pradesh, Telangana and the Bank, relating to amendments to take into account the creation of Telangana, and to reflect Telangana's endorsement and commitment to carry out certain parts of the Project and as reflected in the aide-memoire transmitted to the Borrower, Andhra Pradesh and Telangana through the Bank's letter dated September 1, 2014. We are pleased to inform you that the Bank concurs with the request, and proposes to enter into a project agreement with Telangana for this Project (T-Project Agreement). Accordingly, the AP-Project Agreement is amended as set forth below subsequent to the request and the above- mentioned discussions: 1. The name of the Project "Andhra Pradesh Road Sector Project", wherever used is replaced by "Andhra Pradesh and Telangana Road Sector Project". 2. All references to "Andhra Pradesh", "RBD" and "RDC" in the AP-Project Agreement shall hereinafter been deemed references to the "State of Andhra Pradesh", "AP- HeadquarterIJ Washington DC L USA Mr. 1.Y.R. Krishna Rao -2- February 27, 2015 RBD" and the "AP-RDC" as defined in revised Appendix to the Loan Agreement (i.e. Attachment I to the letter of amendment to the Loan Agreement). 3. Section I.E of the Schedule to the AP-Project Agreement is amended to read as follows: "E. ensure that the Project is carried out in accordance with the terms, conditions and procedures set forth in the ESMF, R&R Policy Framework, EMPs, RAPs, ISAP, HIV/AIDS Action Plan, TDP, Anti-Corruption Guidelines, and GAAP, and that the ESMF, R&R Policy Framework, EMPs, RAPs, ISAP, HIV/AIDS Action Plan, TDP, and GAAP are not revised, amended or abrogated without the prior concurrence of the Bank. Notwithstanding the foregoing, the Project Implementing Entity shall, by no later than May 31, 2015, revise and re-disclose the content of the ESMF, EMPs, RAPs, R&R Policy Framework and ISAP, in a manner and substance satisfactory to the Bank, so as to reflect the new implementation requirements light of the bi-furcation of Andhra Pradesh; 4. Section I.G of Schedule to the AP-Project Agreement is amended to read as follows: "G. ensure that the AP-RDC is fully operationalized by no later than December 31, 2016, including: (a) completion of AP-RDC's outstanding audits; and (b) providing the AP-RDC the necessary financial, administrative, and operational powers to effectively manage the Core Road Network; and 5. Section L.H of the Schedule to the AP-Project Agreement is amended to read as follows: "H. carry out, under Component 4 of the Project, multi-sector road safety measures for at least one (1) demonstration corridor, and taking into account the results of the demonstration projects, develop and adopt by December 31, 2016, a policy and strategy for improving road safety in Andhra Pradesh. The attachment to the supplemental letter regarding performance monitoring indicators agreed further to Section lI.A of the Schedule is amended to read as set forth in the Attachment hereto. All other provisions of the AP Project Agreement, except as amended herein, remain unchanged. Mr. I.Y.R. Krishna Rao -3- February 27, 2015 Please confirm your agreement to the foregoing by signing the form of confirmation set forth below, and returning one fully executed original of this amendment letter to us and retaining one original for your records. This amendment letter shall become effective upon receipt by the Bank of: (a) duly countersigned originals of this amendment letter, the amendment letter to the Loan Agreement and T-Project Agreement, prepared further to the above-mentioned requests and discussions; and (b) a legal opinion, satisfactory to the Bank, prepared by counsel to Telangana, or a competent official of Telangana acceptable to the Bank, pursuant to Article III of the T-Project Agreement and Section 9.02 of the General Conditions. Yours sincerely, Onno Ruhl Country Director, India Confirmed and agreed: STATE OF ANDHRA PRADESH By: Name: pn________ Pa____ Title: -V>RT- 9 ^L- -:;9~ TOC Date: __ _ _ _ _ _ _ _ _ _ _ _ _ Mr. I.Y.R. Krishna Rao -4- February 27, 2015 cc: Mr. Subhash Chandra Garg, Executive Director (India), World Bank Mr. L.K. Atheeq, Senior Advisor the Executive Director, World Bank Mr. Bhaskar Dasgupta, Deputy Secretary, Department of Economic Affairs, Ministry of Finance, Mr. Tarun Bajaj, Joint Secretary (MI), Department of Economic Affairs, Ministry of Finance Mr. S.G. Dastidar, Controller of Aid Accounts and Audit, Department of Economic Affairs, Ministry of Finance, Government of India -Mr. S.M. Das, Additional Director General, Ministry of Road Transport & Highways, Government of India Government of Andhra Pradesh Dr. P. V. Ramesh, Principal Secretary, Finance Department (R&E) Mr. L. Premachandra Reddy, Secretary, Finance Department Mr. B. Sam Bob, Principal Secretary, Department of Roads and Buildings Mr. G. JagannadhaRao Managing Director (RDC) and Chief Engineer & CRN (RBD) ATTACHMENT RESULTS INDICATORS February 2015 Restructuring: Revised Results Framework for AP and Telangana Road Sector Project Target Value (Actuals) Indicators Baseline Thus Far End of Project VRI-VR4 Andhra Pradesh Telangana Outcome Indicators Full operationalization of RDC still not fully Y 1: Outstanding audits completed * GoAP provides RDC with If RDC is formed, RDC with adequate operational; outstanding (Audit of RDC accounts upto 2013-14 has financial, administrative and * GoT provides RDC with financial, financial and human audits; Act to be reviewed; been completed.) operational powers; Rules and administrative and operational resources to manage the no independent financial procedures adopted powers; Rules and procedures CRN & operational procedures; adopted many staff deputed from RBD * RDC has own staffing and adequate sources of revenue for CRN Vehicle operating costs Cars: T5.41 per veh km 12% reduction with project, that is, 12% reduction with project, that is, T decline relative to the W 4.76 per veh km 4.76 per veh km without project scenario in upgradation roads - Truck: 11.85 per veh km 8% reduction with project, that is. 8% reduction with project, that is, T10.90 per veh km t10.90 per veh km Travel time for bus 10.6 hrs for travelling all 7.8 hrs (26% reduction) to travel in 7.8 hrs (26% reduction) to travel in all passengers declines 422 km of upgradation all 422 km of upgrading component 422 km of upgrading component relative to without project roads scenario in upgradation roads Number of road accident SH3 1: 16 Renigunta - . Less than 0.47 fatalities per km Less than 0.36 fatalities per km fatalities per vehicle Rayalacheruvu Corridor,. kilometers declines on (Andhra Pradesh Road Demo Corridors 0. 47 fatalities per km SH4: 16 Hyderabad - Bijapur Corridor, Telangana 0. 36fatalities per km 2 Share of CRN in good 40% Y3:60% 80% 75%0/ condition increased Y4: 71 % (indicative estimate basedon quantum of work undertaken and current (size of classified network: 6,800 (size of classified network: 4.020 km) CRN length (6,800 km) km) Results Indicators for each Component Component 1: Road Corridor Improvement 427 km upgraded 0 Y3:180 km 302 km upgraded 125 km upgraded efficiently and Y4: 79 km of road length has been surfaced environmental and socially with Bituminous layer. sustainable way 6,018 km of roads under 0 Y3: 1378 km 4,301 km maintained through Long 1717 km maintained through Long term Long-term performance Y4: 6,018 km of CRN is under L TPBMC term performance-based performance-based maintenance based maintenance maintenance contracts contracts contract (LTPBMC) Component 2: PPP Facilitation Three roads selected for 0 Y3: 2 2 Roads I Road PPP transactions. Y4: 2 roads (HKR and NAM) have been taken up under PPP Component 3: Institutional Development Milestones in ISAP met Y3: ISAP studies completed; Training Needs Assessment completed * IT-MIS. HR and Training plans * IT-MIS, HR and Training plans fully ISAP consultants delivered reports on fully operational operational Organization Structure of RDC, Scoping * Complete Preparation of State * Complete Preparation of State study, Training Needs Assessment (March Network Master Plan Network Master Plan 2013) ; Study on Road Fund (Nov. 2013); and Road Network MasterPlan for combined state. The reports are to be revised to suit the needs of Residual AP. Y4: IT-MIS, HR plan Environment and Social Management fully operational IT-MIS procurement has been initiated HR plan, Environment and Social Management; partly operational. 3 Milestones in GAAP met YI: Disclosure & complaints handling Disclosure & complaints handling Disclosure & complaints handling operational Disclosures completed mechanism operational mechanism operational Complaint system established and operational. Y2: Third Party Monitoring, Procurement monitoring Third party monitoring consultant appointed for OPRC packages, and auditing is being taken up as per agreed plan. Procurement committee was formed within APRDC and committee is monitoring the Procurement -process Annual maintenance plans Procurement of RDBMS is completed RAMS operational and used for developed through the Procurement of agencyfor data collection, annual plan preparation RMS system other hardware and softiare is initiated Component 4: Road Safety Demonstration projects YI: Road Safety Lead Agency and Multi- Complete implementation Demo Establish Road Safety lead Agency carried out in at least one sector coordination established Transport Corridor with multi-sector and Multi-sector team for road safety road corridor, Dept. has been established as the nodallead coordination and evaluate results coordination (Dec 2015) agency by the GoAPfor implementation of Road Safety Acion Plan (achieved in Y3). Complete implementation Demo Technical Working groups and Road Safety Corridor with multi-sector Cell have also been constituted with the coordination and evaluate results different departmentsfor multi sector coordination (in Y4) Comprehensive GoAP New Safety Policy approved; New Safety Policy approved; road safety functions, institutional arrangement put in institutional arrangement put in place, capacity and action plan(s) place, and Action Plan and Action Plan Implementation drawn put in place Implementation drawn Black Spot Improvement YI: Identification of Black Spots & Complete implementation of Complete implementation of of CRN Collection of Baseline Data on accident improvement of 36 blackspots improvement of 10 blackspots fatalities 36 black spots in five districts have been identifed Procurement was completed Works are in progress Land Acquisition Completed to-date: 305 Acres (62%) 100% to be completed 100% to be completed AP: 235 Acres (6 1%) Telangana: 70 Acres (65%) (Total: 383 Acres) (Total: 107 Acres) Completed to-date: 1060 Nos. (34%) 100% to be completed 100% to be completed Rehabilitation AP: 926 Nos. (33%) Telangana: 134 Nos (43%) (Total: 2,733 Nos) (Total: 314 Nos)